US tightens banking sanctions on Iran

UPPING THE ANTE:With Obama’s order targeting China’s Bank of Kunlun, Beijing said it was a violation of international rules that would undermine bilateral relations

Reuters, WASHINGTON

US President Barack Obama announced new US sanctions on Tuesday against foreign banks that help Iran sell its oil and said the measure would put pressure on Tehran for failing to meet its international nuclear obligations.

The decision came ahead of US congressional votes on new sanctions intended to further strip Iran of its oil-related revenues and drew swift condemnation from China, home to one of the targeted banks and a major buyer of Iranian oil.

The sanctions followed criticism from presumptive Republican US presidential candidate and former Massachusetts governor Mitt Romney that the White House is failing to act strongly enough to stop Iran’s suspected pursuit of a nuclear weapons. Iran says its nuclear program is for peaceful purposes.

The US remains committed to finding a diplomatic resolution to the standoff with Tehran, but is also determined to step up the pressure, Obama said in a statement accompanying his executive order authorizing the sanctions.

Obama’s new sanctions target foreign banks that handle transactions for Iranian oil or handle large transactions from the National Iranian Oil Company (NIOC) or -Naftiran -Intertrade Company (NICO), two key players in Iran’s oil trade.

That builds on oil trade sanctions signed into law in December last year that prompted buyers in Japan, South Korea and India to significantly cut purchases to avoid penalties. China also cut purchases from Iran earlier this year because of a dispute over contract terms.

The new executive order has the same rules, providing “exceptions” to nations that have demonstrated significant cuts.

Obama’s new order also targets China’s Bank of Kunlun and Iraq’s Elaf Islamic Bank for providing services to Iranian banks.

“We expect that today’s action will have a significant chilling effect on the ability of Kunlun and Elaf to operate anywhere in the world,” US Department of the Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen told reporters.

China’s swift and angry reaction to the US sanctions highlighted its insistence that its extensive trade and energy deals with Iran should not be hurt by the nuclear stand-off.

“The US has invoked domestic law to impose sanctions on a Chinese financial institution, and this is a serious violation of international rules that harms Chinese interests,” Chinese Ministry of Foreign Affairs spokesman Qin Gang (秦剛) said in a statement.

The sanctions “will have a -negative effect on bilateral Sino-US cooperation” Qin said.

Calls to Kulun’s administrative office in Beijing were not answered.

Israeli Prime Minister Benjamin Netanyahu said this week that sanctions have not set back Iran’s nuclear program “one iota” and that “a strong military threat” was also needed. However, US officials says that sanctions are inflicting significant pain on Iran and further isolating the country.

Iran’s currency has plunged since the US and EU first targeted its oil revenues this year, making it harder for Tehran to spend money on its nuclear program and ramping up internal political pressures within the country, Obama’s national security adviser Ben Rhodes said.

Iran’s oil exports have also been halved as a result of US sanctions and an EU oil embargo that also bans most of the world’s insurances firms from covering Iranian oil shipments.